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By S. E. Sankey

High anionic functionality acrylamide co-polymers and poly(sodium acrylate) are used as red mud flocculants in bauxite processing operations. These synthetic polymers are effectively displacing starch as the dominant polymer in red mud settling. The performance of these polymers is primarily dependent on the bauxite mineralogy, the alkalinity of the red mud slurry, and the anionic functionality and molecular size (viscosity) of the polymer. In this paper, the physical and chemical properties of the synthetic watersoluble polymers will be reviewed. The relationship between polymer structure and red mud slurry properties as they control polymer performance in settling red muds common to digester and washer circuits will be illustrated. The availability of polymers of varying functionality and viscosity will permit bauxite processors to make significant improvements in the economics of red mud disposal and valuable reagent recovery.

Jan 1, 1982

By R. Y. Wan

Recent research efforts have shown have shown selective solvation extraction of a gold cyanide ion-pair complex from alkaline cyanide solution is possible with organic phosphorus esters. These alkyl phosphorus esters such as tributyl phosphate (TBP) and di-n-butyl n-butyl phosphonate (DBBP) can selectively load gold to rather high levels, even in excess of 30 gpl. However, traditional stripping techniques are not particularly effective. In this regard, gold recovery by direct electrolysis of the organic phase has been found to be an interesting possibility. Further, the rate of direct electrodeposition from the organic phase can be improved significantly by using an aqueous/organic mixture. Direct electrodeposition of sheet gold from loaded DBBP was successfully accomplished at a current density of 8x10 4 amp/cm2 and 55°C from such a two-phase mixture with the aqueous phase as the continuous phase. No appreciable degradation the DBBP was found after 5 cycles of extraction and, electrodeposition. Finally, the applicability of the process strategy for an industrial situation was demonstrated by the successful treatment of waste gold cyanide electroplating solutions.

Jan 1, 1986

By Wayne P. Myers

Electricity, as normally thought of by a layman's definition, is a man- made force that has no color, no odor, is not visible, cannot be heard, yet man can control it and make it perform his work for him. A person dare not cheat on it, for it then will master him. It has laws, rules, and regulations that must be strictly adhered to if it is to perform in the safest, most reliable, and economical manner. In the early days of coal mining the power source was man himself. Later man employed steam and compressed air to reduce his muscle power requirements needed in the extraction of coal. By the turn of the 20th century, electricity had become the most common source of power for the coal industry. Steam and compressed air are still found in use in isolated cases today for specific applications; however, they are rapidly being replaced by electricity. Electrical laws and regulations are quite extensive and somewhat complex for the proper generation and use of electricity. Man-made laws, rules, and regulations for the care and handling of electricity, designed for man's safety, are rigidly enforced by Mine Safety and Health Ad- ministration (MSHA), as well as the various state departments of mines.

Jan 1, 1981

By Michael J. Cruickshank

MICHAEL J. CRUICKSHANK SENIOR AUTHOR Marine mining is a very broad field. It encompasses every facet of terrestrial mining but with the unique addition of a superimposed liquid overburden, which is itself mineralized. It is the unique aspects of marine mining that are discussed in this section. In keeping with the times, a systems approach is taken in the presentation of the material. The environment is first described, and this is followed in logical sequence by the common requirements for working there, then the mineral exploration phase, the exploitation and, finally, the operational restraints imposed by man and nature. Free use is made of tables and figures from original and published works and extensive listings of reference material round out each section. The title "Marine Mining" was chosen in preference to ocean or underwater mining because it is broad enough to include oceans, beaches and inland seas. The selection of terms sometimes may seem odd but they have not been chosen arbitrarily. All things are reduced, where possible, to basics and defined. Applying systems terminology, the word "platforms" is used in the functional sense and includes not only airborne, waterborne and fixed platforms, but man himself in his capacity as a working diver. If there is confusion it is often because of familiarity with a word in a context personal to the reader. For example, what does extraction mean to you-or mining or exploitation? Cost data have been interspersed throughout the section whenever they could be obtained. The use of these data should be tempered with understanding because no two situations are alike and improvements in marine technology are constantly being made. The names of individual authors are listed with each subsection. Where no name is given, the responsibility has been that of the senior author. Acknowledgment is sincerely made to the U.S. Bureau of Mines, and latterly the National Oceanic and Atmospheric Administration, for encouraging and supporting the preparation of the work ; to the secretarial staff at the Marine Minerals Technology Center and to Donald Eisman for editing. To the many other contributors who may not be listed by name, grateful acknowledgment is also due. It is hoped that the chapter will be useful to the practicing mining engineer who suddenly is assigned to marine work or to the experienced marine engineer who is equally suddenly assigned to mining work. It is not possible to put "everything-you -need-to¬-know" into one section, but. the very full bibliographies at the end of the text should adequately fill in for those who wish to know more. 20.1-THE MARINE ENVIRONMENT Marine mining is set apart as a separate discipline by the marine environment. The following subsections describe the environment from the point of view of the physicist, the chemist and the geologist. The interrelationship of these disciplines with the economic mineral potential of the oceans and seas is apparent from the description of the marine mineral resources. The marine environment is an extremely complex natural phenomenon with which the marine mining engineer must learn to live. It can be the source of his wealth or his frustrations and sometimes both. It can never be ignored.

Jan 1, 1973

By Ronald E. Yarbrough

As a result of concern for the citizens of the State of Illinois who owned structures above underground mine workings, the Illinois State Legislature passed House Bill 158 in 1978. This bill amends the Illinois lnsurance Code and creates the Mine Subsidence Reinsurance Fund which is an insurance pool that is to receive a state appropriation of $500,000 as "start-up" money. One hundred thousand dollars has been paid to the fund as of October, 1982. The Fund is to return this appropriation to the State and is to remain self-supporting from premiums. The Fund utilized a pre-existing institution, which also was an insurance pool, the "Fair Plan Facility" and its governing Board, consisting primarily of insurance executives, to administer the program. The Mine Subsidence lnsurance Act went into effect October 1, 1979, and the bill provides that property owners in the State of Illinois may purchase up to $50,000 of mine subsidence insurance which is attached to their fire insurance policy. The deductible is normally 2%, but cannot be less than $250 or more than $500. The annual rate structure for residential structures in 1981 for $50,000 coverage is $10 (frame), and $12 (masonry). The rate structure for commercial buildings is based on the value of the building and the rates for $50,000 maximum coverage is adjusted upward. The insurance was mandated by the State Department of lnsurance and rolled onto the insurance policies of the homeowners in 34 counties which had been recognized as having sufficient exposure to subsidence damage to be covered by the Act. One percent or more of the land surface is undermined in each of the 34 counties. In the other counties undermined in the State of Illinois, insurance is available to the homeowner upon request to the private insurance carrier.

Jan 1, 1982

By E. G. Loesche

Grinding mills in which the comminution takes place between rollers and the surface of a disc, table or ring are generally known as roller type mills. The Loesche Mill, also known as the Disc Roll Mill, is a special type of roller mill in which the grinding surfaces consist of two rollers assembled over a horizontal disc or table which rotates at a relatively low speed. This design is particularly applicable to industry's present day demand for large capacity grinding mills.

Jan 1, 1964

By Haydn H. Murray, Sam M. Pickering

The term kaolin is used here, in a commercial sense, for near- white clay deposits which are dominantly comprised of the mineral kaolinite, or for products refined from such deposits. The term "china clay" has been used in the past as a synonym for kaolin, a reference to its first being mined some 3000 years ago at a hill near Jauchau Fu, Jiangxi Province, China as a porcelain raw material. The name kaolin was derived from the Chinese Kauling, which means high ridge. For most modem industrial applications kaolin must be extensively refined and processed from the crude state to enhance whiteness, purity, and other important commercial characteristics. After such processing, kaolin ranks as one of the most valuable of industrial clays, and it is used to some extent in most manufactured consumer products. In 1991, the United States alone produced kaolin valued at $1,072,366,000. It is applied very widely as a pigment, filler, coater, extender, ceramic raw material, catalyst base, electrical insulator, and pharmaceutical. Some more prominent uses include paper filling and coating; paint, plastic, adhesive, and ink pigment; rubber reinforcing agent; ceramic raw material for porcelain, dinnerware, tile, and enamels; catalyst base for petroleum cracking and auto exhaust emission catalytic control devices; cosmetics base; and digestive coating remedy. Those properties of kaolin clay which make it suited to these applications are related to its physical, optical, mineralogical, and chemical nature.

Jan 1, 1994

By Michael A. Linkous, Mark J. Zdunczyk

Silica in the form of sand and sandstone is one of the most common, and at the same time, unique industrial minerals. Found in every rock type of every geologic age and virtually everywhere in the world, silica is used in products that touch just about every aspect of daily life. Imagine a world in the 1990s without computer chips, fiber optics, or glass, and you have just begun to understand how important silica is to the quality of life we enjoy. The elements silicon (Si) and oxygen (0) comprise roughly 60% of the earth's lithosphere to a depth of about 16 km. The crystal structure of silicon dioxide consists of one atom of silicon bonded to four surrounding atoms of oxygen to form a three-dimensional network of SiO, tetrahedra. This network makes up the mineral quartz (Murphy and Henderson, 1983), the most common detrital mineral in most sandstones. Quartz is also a major constituent of many igneous and metamorphic rocks and is widespread as a siliceous cementing agent in various rock types. Although quartz is common, sandstones, quartzites, and pegmatites and the unconsolidated sediments derived from them that have a silica content high enough and pure enough to meet today's market demands for quality and consistency are not common. USES AND SPECIFICATIONS Silica sand that is mined and processed for industrial uses must conform to the chemical and physical specifications set by customers. In the United States almost half of the silica sand produced is used in the manufacture of glass. Other important products include foundry sand, ground silica, blasting sand, and fracturing sand. Glass Sand Silica is the principal glass-forming oxide in a glass batch. Glass manufacturers develop model specifications for each source of silica sand used. These specifications broadly define the limits and ranges for chemical and physical properties of the sand and are used by the manufacturer in calculating the desired batch mix or formula. Some specifications may be critical to a glassmaker and require very stringent limits on the quantity of impurities in the sand. For example, the total iron oxide content of a batch is extremely crucial when making white or flint glasses (Mills, 1983). Iron is present in almost every raw material used in a glass batch and must be carefully controlled in order to obtain a consistent color in the finished product. It is difficult, however, for a raw material supplier to tightly control the chemistry of a naturally occurring material such as silica sand. To a great extent the commercial quality of a sand is determined by its geologic history. Realizing this, glass producers tailor their model specifications to each source of approved material. In general, a glass company is concerned most about the consistency of raw materials on a day-to-day basis. Soda-lime-silica glass was the earliest type of manmade glass (Baker-Can, 1967) and still accounts for most of the glass manufactured for commercial use today (Mills, 1983). It is relatively easy to melt and shape and is less expensive per ton to produce than most other types of glass (Baker-Can, 1967). Soda-lime-silica glass is used in fabricating containers, flat glass products, incandescent and fluorescent lamps, glass fiber, and many other products. Heavy minerals such as ilmenite, leucoxene, kyanite, and zircon are impurities on which strict limits are placed for a glass batch. Because of their refractory nature they either do not melt or only partially melt, which results in stones or feathers in finished glass. Aluminosilicates such as kyanite also contribute unwanted alumina to the batch as they partially melt. Limits are especially rigid for refractory mineral grains coarser than 0.60 to 0.425 mm (30 to 40 mesh). [Tables 1 and 2] present typical specifications for silica sand used in flat glass and container glass products. The percentages shown represent an average of many companies7 specifications.

Jan 1, 1994

By Scott G. Britton

Today's coal mines are turning more and more to belt haulage as the key system to transport coal out of the mine. The advantages of using belt for both intermediate and main haulage are numerous. Belts are reliable high capacity haulage mediums that can be utilized at low operating costs. They are adaptable to rolls in the coal seam and can handle relatively steep grades. They are not noisy, operate with a minimum amount of labor, and are easily extended and retracted. Belts require the least power of any haulage medium, are easily controlled by push- buttons and interlocks, and present low fire and safety hazards. Belt haulage can also be the largest source of operational problems for mine management when not installed correctly. This chapter and Chap. 6 concentrate on proper installation of both the static and dynamic components of efficient belt haulage. This chapter looks at the static system component, composed of the belt drive, its installation and operation, as well as belt takeup and transfer point construction. These components do not change readily over the life of the installation, hence the term static system. Chap. 6 discusses the dynamic system of belt line construction, which includes belt splicing, breaking down and reanchoring the tailpiece, and extending the belt line, plus operational and maintenance items for belt operation. This chapter is divided into three major topics. The first is a general discussion covering the points necessary for designing an efficient haulage system; the second looks at installing belt drives, head rollers, and takeups, and the third discussion centers on installing efficient and effective transfer points along the haulage system. Each will address the design and construction issues facing the engineer or construction supervisor in charge of installing the system. Before looking at the static system, it may be useful to review some of the basic design factors and considerations of all belt haulage systems. The material usually carried on an underground belt is a mixture of raw coal and rock, commonly known as run-of-mine (ROM) coal. This mixture has certain material characteristics that guide the mining engineer to the final and proper belt selection. The characteristics looked at most frequently are: 1) Angle of Repose is the angle at which the material will freely make a pile. Most ROM coal averages a 35"-39" angle of repose. 2) Angle of Surcharge is the angle a pile will assume on a moving conveyor. This ranges from 5" to 15" less than the angle of repose in most materials. For ROM coals, 25" is the average angle of surcharge. 3) Flowability, which determines the maxi- mum cross-sectional area needed to carry any given material on a belt. It is measured by the angles of repose and surcharge of a material and also serves as an index of the safe incline angle for the belt line. These characteristics, plus practical engineering research and development work are defined by an organization called the Conveyor Equipment Manufacturers Association (CEMA) for most bulk materials. CEMA also provides a code for each classified material depending on the characteristics above and the subjective considerations of the average size to be encountered, the abrasiveness of the material, and any miscellaneous characteristics (oil resistive, corrosive, etc.) which may be important. For coal, CEMA (composed of member companies in-

Jan 1, 1983

By E. T. Pecina

Bioleaching is a viable option for the processing of auriargentiferous refractory ores with high arsenic content. The application of mesophilic (A. ferrooxidans and ?L. ferrooxidans?) and thermophilic bacteria of the genus Sulfolobus (S. solfataricus and S. acidocaldarius) as oxidant treatment before the cyanidation of an industrial arsenical pyrite concentrate is presented. The results show that extraction of gold and silver increases due to bio-oxidation caused by mesophilic bacteria and results in a maximum gold recovery of 68%. In all strains studied, biooxidation resulted in an average silver recovery of 50%. The results showed that all evaluated strains were sensitive to solids content (5 to 20%) and average particle size (75 and 38 µm) of the concentrate.

Jan 1, 2010

By E. Kaya

Investigations of fine grinding of bituminous coal in a laboratory-scale pulverizer are described. The results indicate essentially "normal" breakage behavior at relatively coarse sizes (greater than about 20 µm) but show clear evidence for re-agglomeration in the fine size range (less than about 10 µm). A simplified population balance model for simultaneous growth and breakage has been formulated. Breakage rates and breakage distributions are assumed to follow the patterns typically observed in simple grinding systems. It is recognized, however, that solid particles and agglomerates may exhibit different breakage behavior. Agglomeration rates are assumed to be determined by contact probability, i.e. by the relative numbers of interacting particles. Based on comparisons of model simulations and experimental data, it appears that agglomerate re-breakage rates and fragment size distributions are quite different from those for solid particles. The result is that product size passes through a minimum and then increases with time as agglomeration begins to dominate.

Jan 1, 1996

By Raj K. Rajamani

In ball milling the rates of breakage vary primarily with the size distribution of powder in the mill. In wet grinding viscosity of the slurry varies continually as size distribution changes and hence the breakage rates change. In this study a simpler estimation scheme is used to determine breakage rates in batch grinding. Using an approximate solution to the batch grinding equation, acceleration and deceleration of breakage rates of all individual size classes is determined when the grinding environment is varied. Experimental results with limestone and copper ore show time-dependent breakage rates under both dry and wet grinding conditions. In general the breakage rates increase for coarse sizes and decrease for fine sizes with increase in the fines present in the mill. Such variations have strong implications in closed-circuit grinding.

Jan 1, 1991

By P. Schilizzi

The increased impact of mining subsidence in the U.S. coalfields and the recent regulatory constraints legislated by government and state agencies have provoked an intense research effort on this topic by government agencies, coal companies and academic institutions. Subsidence and horizontal strain predictions are a basic requirement if subsidence and its associated effects are to be controlled and contained within acceptable environmental levels. As a result, several such prediction techniques have been proposed or are currently under development to assist coal operators in minimizing the detrimental effects of these surface deformations. VPI&SU has been actively involved in this research effort in the past few years, with particular emphasis on the Appalachian coalfield. During the initial stages of this research a large number of subsidence case studies were collected from the literature, the coal industry and government agencies. In total, data from 32 longwall panels and 60 room and pillar panels were collected. This data bank was used to determine relationships between the basic mining and subsidence parameters, in order to allow the evaluation of the various prediction methods for the Appalachian coal region. Based on this data two subsidence prediction techniques, one based on profile functions and the other on influence functions have been developed. Profile function methods provide a tool for a fast calculation of subsidence on a line across a mine panel. Influence function methods, on the other hand, allow for a more detailed calculation of ground movements, in any mode and at any depth, on a grid or at any specific point. The limitations of the data of the collected case studies, i.e. accuracy of surveys, frequency of monitoring, lack of horizontal movement measurements, etc, led VPI&SU to the initiation of a detailed subsidence and strain monitoring program above a number of active mines, located in three major coal producing counties of Virginia. The aim of this program was to enhance the data base with accurate and complete measurements of surface movements and to allow, therefore, the refinement of the prediction techniques. This paper presents this monitoring program, discusses in detail the results obtained from three specific case studies and provides recommendations for the implementation of the field data in the general prediction methods.

Jan 1, 1986

By Richard A. Thomas, Liming Yuan, James H. Rowland III, DAVOOD BAHRAMI

To reduce the number of injuries resulting from fires on mobile, diesel-powered mine equipment, it is crucial to promptly suppress a fire once it is detected. The focus of this research was to determine the effectiveness of fire suppression agents. Large-scale tests were conducted using five different fire suppression systems based on: dry chemical, wet chemical, dual agent (dry and wet chemical), carbon dioxide, and water mist. Suppression nozzles were placed around the diesel engine where diesel fuel, engine motor oil, and hydraulic circulating oil spray fires were ignited. The results of this study can help mining companies and manufacturers by providing scientifically based data on the capabilities of the different fire suppression systems.

Feb 1, 2024

By Kenneth P. Katen

Though the use of continuous mining machines consolidated the operations of cutting, drilling, blasting, and loading in one machine that would theoretically provide uninterrupted production, it was soon realized that the face haulage and roof support operations remained as major impediments to continuous production. The ability to provide not only continuous cutting and loading, but also continuous haulage and roof support (see Fig. I), was the basis for the introduction of mechanized longwall systems in this country from Europe in 1951. The early systems employed friction props for roof support, but were to become obsolete shortly after introduction of the first hydraulically powered, self-advancing supports in 1960. Since then, use of the longwall technique has grown to the point where it is currently providing more than 5% of the annual output of underground coal mines in the United States. The shortwall system had its origin in Australia, but was first introduced into this country in 1962 following the development of powered roof supports. It, too, provides for continuous cutting, loading, and roof support (see Fig. 2), but has not experienced the widespread popularity of longwall due to its inherent inability to easily provide for continuous haulage. While there are in the neighborhood of 100 longwall systems currently in operation in this country, there are only a handful of short- wall operations providing production of slightly more than 907 184.7 t/a (1,000,000 stpy) Both of these systems provide uninterrupted roof support for face operations by means of hydraulically powered steel roof supports. In each case, the coal removal consists of open-end cuts made from the narrow end of a large rectangular pillar (panel) which has been blocked out by continuous miners developing entries around its perimeter. However, this is the extent of the similarities between the two systems. It is hoped [ ] that the information presented in this chapter will enable the reader to better understand the two mechanical systems and the mining concepts involved in their employment.

Jan 1, 1981

By L. D. Cruz

In Exxon's Los Bronces Expansion Project in Chile, a stochastic simulation is performed to resolve the complex decision problem of matching the mine to mill system capacities from both technical and economic standpoints. The unique combination of weather conditions at the mine and the 30-km belt conveyor network for ore transport to the mill necessitates this analysis in the planning phase to optimize the design capacity of the sys tem. Appropriate statistical distributions of major equipment performance, snow storm duration, power outage, etc, ate developed from actual mine local records and manufacturers specifications. The interactions of operational constraints including ore storage capacities, number and sizes of individual equipment, ore variations, and mine and mill production rates are studied more realistically than in a traditional planning approach. Details of the computer modeling and typical results of simulation studies are discussed.

Jan 1, 1981

By John T. Cantwell

INTRODUCTION The process engineer usually is responsible for the design operating philosophy and/or day-to-day operations of a process. Since instrumentation is an integral part of the operation, it is essential that engineers understand the general capabilities of the different types of control equipment available. Many "noncontrol" engineers have become involved with instrumentation for machinery monitoring and control as well as other plant applications. The advent of the microprocessor has led to significant changes in control, both in systems configurations and man-machine interfaces. Today's concept is called simply "distributed control." What is distributed control? Distributed control is exactly what the name implies; the control system is divided into several functional segments and spread out to cover a process. The systems are distributed for physical, functional, and risk reasons. Before delving further into the specifics of distributed control, let's look at the evolution of control systems to see how we got here. Instruments initially were located near measurement and control points in the field. Operators physically had to go to the instrument to change setpoints or take measurements. As processes became more complex, it became evident that a central control area was required. This allowed an operator to monitor and control many variables. The operator's effectiveness was increased dramatically, which resulted in greater efficiency, better quality control, and lower personnel requirements. At the same time, plants became much larger, control applications became more complex, energy became expensive, and the industry became more competitive. All of these factors placed pressure on process and production engineers to get the most for the money. The result was a continuing push to put more instrumentation into a central control room to maximize efficiency and productivity and minimize manpower. This chapter deals in some detail with devices for measuring physical and chemical properties of coal; devices for measuring the weight and weight-rate of flow of coal; devices for the monitoring and control of conveyor systems, solids inventory, fluid flow, liquid level, density, and specific gravity. These instruments have a multitude of uses throughout a coal preparation plant. The discussions cover advancements in "on-line analysis," nuclear control devices, and distributed control using microprocessors, mainframes, and soft-

Jan 1, 1991

By William E. Foreman

Editor's Note: For purposes of uniformity throughout this book, Coal Preparation, 5th Edition, the editors have advocated the use of the U.S.A. Sieve Series of testing sieves (see Table 6-2) as the testing sieves of modem choice. The adoption and use of the U.S.A. Sieve Series and its forerunner, the Tyler Standard Screen Scale, has for over seventy-five years introduced uniformity into reports; has simplified the comparison of results; and has provided control for operation of modem coal preparation circuits. While a full explanation of the differences, and more importantly the similarities of these two measuring systems cannot be stated here, it is felt that a brief clarification of terms is in order. The difference between the U.S.A. Sieve Series and the Tyler Standard Screen Scale Sieve Series is the identification method. Tyler Screen Scale sieves are identified by mesh designation with the width of opening varying by the square root of two, or 1.414 times the width of opening in the previous sieve. The U.S.A. Sieves are identified by openings in millimeters or microns and also arbitrary numbers which do not necessarily mean the mesh count; this series uses width of opening variations in the order of approximately the ratio of the fourth root of two, or 1.189. Tyler Standard Screen Scale and U.S.A. Sieves can be used interchangeably, and to avoid confusion the nameplate of all Tyler Screen Scale sieves show the U.S.A. Number, while all U.S.A. Sieves show Tyler Screen Scale mesh equivalent numbers on the nameplate. INTRODUCTION Sizing is the process of separating mixed mineral particles into groups of particles all of the same size, or into groups in which all particles range between definite maximum and minimum sizes. This chapter applies the modem mechanical screen and the liquid-solid cyclone (hydrocyclone) to the process of sizing solid particles as applied to coal preparation. Screening is a mechanical process that separates particles by size. Modem coal preparation is made possible by efficient sizing. Sizing of coal is defined in terms of the opening through which an individual particle will or will not pass, or as two openings, the larger of which passes the particle and the smaller of which retains the particle. Screening accomplishes sizing by passing coal of a wide range of sizes through a series of screens, each of a decreasing size. The individual screen discharges are then directed into different screen products for subsequent sale or processing. Screening in modem preparation plants is done for the following reasons: 1. Removal of fine coal before a size reduction step. 2. Size separation of the coal into a coarse and fine fraction for sized products or for processing in coarse and fine coal circuits. 3. Recovery of heavy media from heavy media coal cleaning circuits.

Jan 1, 1991

By Alfred Jr. Petrick, William A. Vogely

INTRODUCTION The scope of mineral finance extends beyond the economic aspects of property evaluation to all of those activities involving acquisition and utilization of funds with an objective to optimize the value of the firm. It must, therefore, en- compass consideration of the overall financial goals of the firm, decisions involving external versus internal growth and domestic versus foreign investments, management of working cap- ital, efforts to minimize the cost of capital, and decisions with regards to the instruments of long- term debt and equity financing. The scope of this section is limited to considerations of special interest to the mineral or petroleum engineer, which include the following aspects of mineral finance: (1) The technical aspects of mineral or coal property or oil and gas reservoir evaluation which provide the basis for estimation and forecasting of revenues and costs. (2) Estimation and forecasting of costs and prices in a inflationary economic environment. (3) Calculation of cash flows which model .. , the investment in minerals, coal or oil, and gas. Such models require assumptions as to the timing of cash flows, escalation of capital and operating costs, base prices, and escalation, the tax regime, royalties, division of profits and the economic aspects of loans. (4) The role of discount rate in the economic analysis of an investment which requires consideration of the opportunity costs of the firm, cost of capital, risk premiums. (5) Risk analysis including application of the concepts of conditional net present value, expected value, and risk preference as well as the application of the techniques of sensitivity and simulation. (6) Selection of application criteria for in- vestment decision making. (7) Capital structure with particular reference to the effect of debt financing. (8) Consideration of sources of funds utilized by the minerals industries. (9) Long-range planning including portfolio analysis. This section is limited to principles, methodologies, and trends in mineral investment, finance, and long-range planning in the United States with a perspective from the year 1984. Consideration of the key concepts is supplemented by case examples of investment risk analysis and financial structure. Important factors affecting mineral investment evaluation during the 1980s include volatile metals prices, cost inflation, and the introduction of techniques requiring the computer and its capacity for improved technical and economic analysis into the hands of those who know most about the industry. The personal computer is replacing the calculator on the desk of the individual analyst and is rapidly becoming a required tool for the study of engineering and economics. Examples of change brought about by the micro-computer include greatly improved techniques of cost estimation, wider application of the computer for project analysis, computer graphics, reserve estimation, geostatistical analysis, mine design and other techniques that capitalize on the ability of the computer to handle

Jan 1, 1985

By Frank R. Field, Joel Clark, Walter C. Labys, William A. Vogely

Mineral models provide a systematic and comprehensive approach for analyzing and fore- casting the behavior of mineral markets and industries.' They also permit the analysis of a wide range of policy decisions. Obviously such models cannot capture all of the intricate relationships that shape the behavior of a mineral market. However, such models have become extremely useful and in many cases support the decision making approach of judgmental analysts. They tend to narrow the range of likely outcomes and thus reduce the risks and uncertainties of investing, trading, and speculating in minerals. Mineral models provide not only answers to "what-if" questions, they also inform analysts of the benefits and costs associated with mineral investment decisions. More recently they have been applied to specific mineral issues of the possible impact of buffer stock stabilization schemes and of import supply restrictions. Mineral Models Defined Because mineral models are so diverse, we must begin with a fairly broad definition. A mineral model is a formal representation of a mineral market, industry or system where the behavioral relationships included reflect the underlying economic and engineering factors as well as the political and social institutions. Of ten, but not always, a mineral model will consist of some combination of the following components: demand, supply, inventories and prices. Modeling of demand behavior normally begins with an interpretation of basic demand responses to prices and income (i.e., the associated price and income elasticities). Price elasticities vary among different minerals and among their diverse uses. They tend to be lower for minerals without close substitutes than for those where such substitutes exist. In addition, these elasticities vary with time as well as with the actual excess demand or excess supply. Variations like these, coupled with the relative instability of prices for a number of minerals, make explanations of demand behavior difficult. The degree to which demand responds to changes in income depends on the income elasticity of the end products to which the minerals serve as inputs. Those products with a relatively low income elasticity tend to experience proportionally smaller swings in sales than those with higher elasticities. The transmission of demand cycles to minerals producers comes through a series of stage-of-process effects. Demand measurement also is influenced considerably by mineral substitution patterns. The cross-price elasticity of a competitive or complementary commodity also varies with minerals, markets, and time. Where minerals easily substitute for one another, as in the case of cop- per and aluminum in electrical conductor applications, cross-price elasticities are relatively high. Modeling of mineral supply behavior normally involves consideration of resource development, economic conditions, geologic

Jan 1, 1985